Rob Webster is chief executive and Stephen Dorrell is chair of the NHS Confederation. Part One of this interview is here.

HPI: Are our current models for dealing with failure, be it organisational or regulatory, coherent?

Rob Webster: We’ve recalibrated failure in the last year, in ways that mean I don’t believe everyone in the system – politicians, national bodies, front-line chief executives - understand what accountability really feels like. I liken it to having children, and the not knowing what it’s like before you do. It opens a vista that didn’t exist before.

Being an accountable officer for the safety of every patient and the value for every penny is a great driver of commitment, and gets you out of bed with purpose.

And over the past year, we’ve seen that many accountable officers – most in the acute sector – concluded that they can’t deliver on the money. That’s what I mean by recalibrating failure, so if you’re only £10-20 million overspent, you’re OK; £20-30 million, we’ll come and have a look; and if you’re over £30 million we’ll intervene.

This recalibration ignores a group of people in the chief executive community who feel that financial failure to balance deeply.

Financial balance is a must-do, and some big steps on this are clearly about to be taken. We must stop the situation where 96% of acute providers are in financial distress, and get to a place where 80-90% of accountable officers and provider organisations are back in the right place.

This needs support, not censure - and a recognition that the current system is broken. By which I mean we’re delivering care in pathways we can’t afford. And we need to support change, not kick people.

The language of regulators unhelpful, from CQC’s 'requires improvement' classification, which the public can read as unsafe (when it isn’t), through to Monitor with ‘intervention’ and ‘failure’ for basically a finance review.

I think getting this right requires us to look at how NHS Improvement gets alongside organisations to get the 80-90% back to a good place. This means having to genuinely look at places where the only solutions are structural, as structure will never be sustainable as they stand now.

You could ask me, or Stephen, or Simon Stevens or any experienced system leader where we're talking about, and the places in question have not much changed in the past 25 years.

People have been a bit sniffy about the success regime, but we should take the intent as positive: at heart, it’s about aligning behind an infrastructure to get this right. Good execution matters.

Stephen Dorrell: It shouldn’t be so, but there is something magic about achieving an overspend of zero. Once you’re in deficit, any CE will say that you’ve lost permission to run your organisation and you only continue to exist because other people will stand behind you.

Each real decision gets made by those people standing behind you, or people think you're only doing this or that because you're being compelled to by your backers, and so they want to talk to the real decision-maker standing behind you.

We have to move beyond a health and care system which never looks beyond individual organisations’ sovereignties. Equally, we’ve never run the NHS as a single organisation nationally.

We have to have local high-quality, good-value care with sustainable finances. That allows management teams, including clinicians. to deal with stakeholders. The moment you depend on a financial lifeline is the moment that destroys a local manager’s authority.

HPI: Do you think Simon Stevens' comments/warnings ahead of SR announcement were helpful or unhelpful?

SD & RW (simultaneously): Helpful.

SD: I think the arguments made by Simon in semi-public at the HSJ Summit (under the Chatham House Rule) were reflecting what everybody in the room knew to be the truth.
It’s important those who make decisions (and I say this having been a Treasury minister) are far from the front line, making it always hard to distinguish truth from noise.

Simon Stevens spoke with real authority to get this settlement front-loaded, which gives us an opportunity to deliver.

RW: Having been in the DH spending team and negotiated with Treasury about how much the NHS can get, this year represents a fundamental change in how we do business.

This was first made clear with the Five-Year Forward View: no ministerial forward, not presented to Parliament, just published.

The Comprehensive Spending Review used to be done by groups of nerds talking how much £ with massive spreadsheets. Now that's playing out in public with someone who feels they're really independent from the DH: that can only be good.

HPI: Providers in all sectors are consolidating and/or integrating over the purchaser-provider split to survive (Manchester, Birmingham, GP federations, NW London, Yeovil, Northumbria), which is more or less orthogonal to both the letter and the spirit of 2012 Act. Why haven't politicians who supported the Act and regulators noticed? Where will this meet its first legal challenge? And do we need new legislation?

RW: Monitor’s first duty to act in the best interest of patients, as was established following the ‘pause’ in the 2012 legislation.

What emerged from that was a reinforcement that Monitor’s primary duty is to act in the best interest of patients: if that means people collaborate, then the system must support that, and likewise if it means competition.

What we have at the moment is a commissioning system lacking both precedents; fearful of rules and waiting for clarity. Meanwhile, providers are seeing the future and trying to get on with delivering it.

There are key questions of how we know what is in the best interests of patients, and we need some precedents and support.

But I don’t think this is against the spirit of the legislation.

SD: I also think the understanding of what's meant by the ‘demon’ words competition and collaboration is grotesquely simplistic: the two are presented as mutually exclusive alternatives.

Actually, to engage with your question about crossing the purchaser-provider split, that is essentially about deciding who manages risk for a population and how to structure service to use resources intelligently to deliver outcomes.

And if you draw a line, of which all payers or providers are on one side or the other, then you’ve got something that is grotesquely simplistic.

We should be starting from a more nuanced understanding of what an intelligent commissioner should be doing on behalf of the taxpayer: that could mean they create some services themselves, or engage with service users to get their choices aligned to good quality and best value and recognise that some choices are best made on the provider side of the fence.

The commissioner role goes beyond a set of transactions: that’s a reductionist view of commissioning, where you could set up an internet site and run auctions.

HPI: Although thinking back to the independent sector treatment centre take-or-pay contracts, an ‘NHS EBay’ might have been quite handy …

SD: Yes, but we can’t pretend that every standard classification operation is identical. Commissioning - properly understood - is about how we balance all the differing elements: the clinician's view of quality, the patient's view of quality, and difficult decisions about value ... it's about how we marshal all of these to make intelligent choices.

Even relatively simple elective care like a hip replacement operation, which you’d think ought to be relatively simple to commoditise, isn’t terribly. Because patients come in all shapes, sizes and ages.

This conversation needs to be more nuanced, but unfortunately the political debate on both side have been very unhelpful.

RW: One final thought on competition: human beings are competitive, and good systems and structures channel that to deliver sensible outcomes. ‘Kum-by-ah’ mantras are not an answer.

At the heart of your question is something that we do need to resolve: the question of who makes the choice about whether people should be competing or collaborating, and how they make those decisions. Back when I was a PCT chief executive, I was pretty clear that it was me who did that, and so I could work closely with providers, but I also sometimes went to market to ginger things up. And some of those tenders worked badly, and some really well.

Commissioners feel the law makes them go to market: the law, rather than doing the right thing for patients. We need to get that default setting right; it should be local leaders and commissioners working with providers to make those choices.

SD: It's also about the quality of the commissioning process as a whole; the relationship between local commissioners and national bodies.

HPI: Does the NHS have the change management capacity and capability it needs to transform its delivery models and methods?

SD: I have a very strong view that we have a lot of very, very able people in the NHS, which is why I made the point about the disempowering effect of overspends more than zero.

Engaging with NHS management, understanding that managing the NHS is an essential public service in the best interests of taxpayers and patients, and empowering the management process in the NHS is where this must start.

Any messages from ministers, NHS England or NHS Improvement that we can proceed without engaging management and staff would be just plain wrong. And impossible. Because NHS management is the bedrock on which process must begin.

I’m not suggesting that the NHS management cadre must be immune from external influence. Absolutely not: we run system, other countries run systems, so we need mutual learning, but not by subcontracting to consultants and outsourcing (and I should declare that I do some consultancy for KPMG).

This should be about imparting management skills through groups, and being open to external influence and learning.

RW: in practical terms, we need to look at the system landscape and ask ‘does it make sense?’

Improvement capacity is scatted all across organisations. Roles are within NHS Improvement, Monitor, TDA, NHS England (which has NHSIQ), and we at Confed have parts of NHSIQ. Then there are academic health science networks, patient safety bodies, and CCGs’ improvement roles. Try to map all that …

HPI: Sounds a bit Sykes-Picot …

RW: And getting the diffusion of improvement right is a massive problem, I am quite clear that our task is simply about asking staff to change the way they work. To succeed in doing that, we have to tap into their values and change their minds.

And I think we have the answers to hand: I think it’s the pillars of the Berwick report creating change capacity at every level, Michael West’s work around connecting teams to organisational purpose and clear strategy and focus on values.

How we support change will be about having implemented the Berwick recommendations, and ensuring every board can pass the Michael West tests around genuine teams.

The infrastructure for change needs to be consolidated, probably on academic health science network footprints, with change capacity from strategic clinical networks, in all organisations.

And we need to build something to support and fund change in the health and social care system.
But if we're not doing Berwick, West and much of the Smith review, we won't be able to deliver the change and we'll not be doing our job of supporting leaders and managers on this incredible journey

SD: All of those three who Rob mentions are influences, not substitutes, for changing the deal we make with accountable officers. Every time politicians sideswipe about bureaucrats, they undermine our capacity to deliver high-quality care.

RW: It all pivots on the accountable officer. They feel the full force of arms-length bodies and the Department of Health. They’re the ones having to support the whole organisation.

We’re asking them to be accountable for all that, but also to delegate authority as far as possible to people within their service. That’s a very different place to be from what we’ve asked of chief executives in the past, but it’s the only option for success.

HPI: How do you think the NHS is doing with progress on equality and diversity?

RW: Clearly we’ve always had the diversity in our staff. And with about 40% of senior figures in the service being women, we’re not doing too badly on gender.

So our real issue is ethnicity, and the incredible apparent lack of emerging talent.

There's a 'two horses' debate - the righteous anger one, which we should really harness, because it's genuinely not right. The other, which nobody wants to ride but everybody should, is to look at the range of current issues, which the NHS has never faced before in its history.

This is a different cultural context, and also a different set of patients, so in varying from the norm, we should tackle variation with variation. And if you do that, the emerging evidence is you succeed. It’s time to see diversity as a benefit and asset, which will be more effective than righteous anger.

SD: Although the Confed ended up with a white male as its chair, the interview process for chair rightly probed my own and other candidates’ attitudes as to how important this agenda is and how it needs to be addressed.

RW: One of my themes is how we can stop wasting the assets of staff and patients every day. This is a clear staff-side issue, shown in Roger Kline’s work for NHS England on equality and diversity.

On the patients’ side, I get frustrated by lazy terminology about ‘hard-to-reach’ people: it’s a term I’d ban. The services that people find difficult to access and usually designed by people unlike and without insights into those who would use them. There’s been some great work on this, and it gets to heart of what commissioning is for, if it’s not to engage people in local ways to add value.

HPI: Rob, in your time as chief executive of Leeds Community Trust, you were involved in some initiatives on this: has their work been sustained?

RW: I’m not close enough to the team today to be definitive, but I know they still work with change people and with Black Health Initiative, who talk about what works, and who run BME Cancer Voice nationally, to help people get over stigma in black and minority ethnic communities.

The fundamental principle we used in Leeds was quite simple - as trustees of public money, we had to have members and changes services as the financial challenge was not new.

We saw that we needed to engage in different ways with the populations we serve, so we proportionately engaged more with those who found care hard to access. Using the insights of those people we engaged, we saw changes to the design of services; so the messages on engagement fed directly into service redesign.

HPI: How can the broader NHS improve and sustain efforts to improve diversity and equality?

RW: We have to ask ourselves how we ensure consistency of leadership to allow to relationships to continue. Without consistency of leadership (and the NHS has struggled with this in recent years), we have to have consistency of values.

Finally, I liken these developments to working together to packing some snow into a ball: you keep rolling it along the ground, and it gets bigger, and you push it up hill and at the top you let go. Momentum will make it unstoppable; you don’t know exactly where it will land but you do know it’ll be somewhere better.

SD: Rob's point on diversity offers us a way into a much bigger set of issues. Two things are driven by doing diversity properly, which develop into part of the broader momentum.

Firstly, we are not good enough at working with service users form BME communities; so if a combination of anger and commitment to act teaches us how to work alongside them, that will benefit all users as well as those commissioners.

Secondly, this is not about change as an event: this is about learning that change is a process: a lesson that the health and social care sector is slow to learn.

At heart, the NHS is a set of values, not a set of services. Change is a way of life, working with people who use services may not be the whole answer to everything, but it’s a vital part.

HPI: How do we fulfil the Comprehensive Spending Review commitment to fully integrate health and social care by 2020 when the latter is a) means-tested and b) skint?

RW: The prior question on this (as with seven-day services) is what do you mean by fully integrated? Someone needs to clearly define what this means. I think this is one of the fundamental questions to determine success of the health and care system.

If we don’t know what we mean by fully integrated, we’ve got a vacuum. I don’t know how much system leaders really understand community-based care. You can have a vision, and a policy lead or national ambassador for community care, but the question is how are you implementing it?

There are about 190 million patient contacts by NHS community services a year, but too often the conversation is reduced to being about GPs and hospitals, and so it misses the interventions making the biggest difference to peoples’ lives.

We need to recognise that this is a wicked issue, and focus good brains, instruments and policy onto delivery.

And we can use integration pioneers' experience to help. They’ve not gone away, Dr Judith Smith of HSMC is evaluating their impact. So we’ll look at that, and work with the LGA and ADASS on promotion of solutions.

But unless we get though shoring up providers' overspending next year, we can forget all this.

SD: The fact that the care sector means-tested where health is (mostly) not is not a worry – I used to think it was, but no longer do, as there is evidence that it is being done in different parts of the country on a routine basis. So that bit is soluble.

The worrying bit is the skint bit: this needs clarity of purpose, vision, policy and a definition of what we mean by the grand concept of full integration. It’s also about giving financial headroom, going back to the CSR settlement. The inescapable headline is that the extra money is not enough to deliver our current model of care. In principle, I think it can be enough to get on with change at pace and across the sectors.

RW: The ultimate test of local leadership is this: we have places where local government and NHS leaders are saying ‘we can take a risk together on money and service’, and places where local government say ‘we’re not touching the NHS and saving £22 billion’ and places where the NHS are saying ‘we’re not touching social care and its £5 billion gap.

SD: Neither of those latter two categories is a sustainable position.

HPI: The builder’s motto is 'fast, good-quality and cheap: pick any two'. How do NHS leaders address this dilemma?

RW: This is a job which is not fixing a kitchen sink.

SD: It’s a comment on the human condition – we have to treat all as equally important. That's the reality. It’s about health. And understanding people and how they live their own lives – yes, there is their own responsibility bit, but also, we treat people; not conditions. You pose that dilemma as if we have to make a choice: we have NOT to make a choice because those objectives are all there.

RW: I would say we will end up in that space of having to choose two if we don't have the conditions for us to succeed

Part of this is about political will to see service delivery change: not the will of national politicians, but of local councillors MPs, scrutiny committees. Without local political will and understanding, it will take a long time, and we will end up in a ‘pile it high, sell it cheap’ debate.

Ultimately, in the NHS we waste people assets every day, and we run a service which thinks that adopting nineteenth century technology like phone consultations is revolutionary.

So I think it’s not ‘pick any two’: it’s ‘pick different’